Circuit Judges Mary H. Murguia, H. M. Margaret McKeown, and William A. Fletcher affirmed in part and reversed and vacated in part a district court’s record $60 million judgment in statutory and punitive damages against credit reporting agency (CRA) TransUnion LLC following a jury trial in an FCRA lawsuit.

The lawsuit claimed TransUnion incorrectly placed Office of Foreign Assets Control (OFAC) terrorist alerts in credit reports and sent consumers confusing and incomplete information about how to get them removed. The $8 million in statutory damages and $52 million in punitive damages were for:

Willful failure to
follow reasonable procedures to assure accuracy of the terrorist alerts in
violation of FCRA § 1681e(b);

Willful failure to
disclose to the class members their entire credit reports by excluding the
alerts from the reports in violation of FCRA § 1681g(a)(1); and

Willful failure to
provide a summary of rights in violation of FCRA § 1681g(c)(2).

In February 2011, Plaintiff Sergio Ramirez went to a car dealership to buy a car. After the dealership ran a joint credit check on Ramirez and his wife with TransUnion, the salesman told Ramirez that they would not sell him a car because his credit report indicated that his name was on an OFAC “terrorist list.”

The credit report prepared by Defendant TransUnion – one of the nation’s three largest CRA’s – also listed the names and birthdates of the two prohibited Specially Designated Nationals (SDNs) who purportedly “matched” Ramirez. Neither of the two SDN had the exact full name or birthday as Ramirez.

In February 2012, Ramirez sued TransUnion
on behalf of himself and 8,184 other consumers who were falsely labeled as
prohibited SDNs. Ramirez claimed TransUnion violated the FCRA by placing false
OFAC alerts on their credit reports and later sending misleading and incomplete
disclosures about the alerts.

The Ninth Circuit concluded all 8,185 class members had Article III standing since TransUnion’s handling of OFAC information exposed them to a real risk of harm to their privacy, reputation, and information, a statutory violation constituting a concrete injury defined by the U.S. Supreme Court in Robins v. Spokeo.

However, the Ninth Circuit also “held that the punitive damages award was excessive in violation of constitutional due process” and thus remanded with instructions to reduce the punitive damages award from $6,353.08 per class member to $3,936.88 per class member. Judge Murguia wrote in the opinion:

Trial attorneys understand
the importance of a narrative, and “the story of Mr. Ramirez” has all the
compelling elements: a sympathetic protagonist, a corporate antihero, and
thousands of unseen victims. The purpose of a trial, however, is to evaluate
evidence, not produce a satisfying plot.

Although the strategy behind
presenting only Ramirez’s unusually sympathetic case to the jury was self-evident,
the nature of his claims likely bore little resemblance to experiences of the
absent class members. Or perhaps they did. But based on the evidence at trial,
it is impossible to know.

Enacted in 1970, the Fair Credit Reporting Act (FCRA) 15 U.S.C § 1681 promotes the accuracy, fairness, and privacy of consumer information contained in the files of CRAs, and was intended to protect consumers from the willful and/or negligent inclusion of inaccurate information in their credit reports.